KEY CONSIDERATION IN BUYING PROPERTY FOR INVESTMENTS

Property investment is a real estate property that has been purchased by an individual with the intention to earn something in return either through rental income or from the sale of the property. A property investment can be done for the long term endeavor in which you may receive rental income or for a short term investment where the property will be sold for a profit

Property management is a big step towards future financial freedom although there are many things that you need to consider before you take a step towards the investment process. You need to have all the required knowledge before pursuing with property investment which comes with challenges and risks.

There are however few key considerations before you are starting to invest on a property and below are the key points that you need to have in mind:

Location

Perfect location yields more interests and prospects and that is why location is being considered as the key point that an investors need to consider before starting to invest in a property. If the property is located in the middle of the busy cities you might get more people who are interested to rent the places in a very short time. Who would want to commute more than 1 hour to work every day, when the rental would not be much different if you added in the transportation costs. Coupled with if you added your rest time, most people wouldn’t mind paying slightly higher to enjoy the comfort of less commuting time to work place.

The same goes to if the location is nearby amenities such as schools, factories, shopping malls and transportation hubs, you will get more possibilities to be able to rent the place quickly as these days people are looking for places that are nearby these amenities to make it a convenient places them to stay.

Public transport

Transportation is an important factors you should consider before purchasing a property. If your property is nearby public transport such as MRT or LRT, you have a higher chance of renting out the property easier and at a higher rental fees.

The tenants are usually the young generation, who left their town to work in the city, and do not have their own transportation. Hence, it is imperative that these properties be located near public transport to improve the rentability of the house.

In addition, the values of properties near public transportation tends to increase significantly higher than properties located far from public transportation. This is because of the bigger potential market of customers, as they include people who rely solely on public transportation.

Purpose of buying

Normally investors will invest in a property in order to earn from the rental income if for the long term investment intention but for the short term investors, they will look forward to sell the property to earn their capital gain from it. Either way the intention is still to get the return from their investment.

Choosing the types of properties can also determine your success in property investment so knowing which types of properties will work well in these days economic condition will help you a lot in getting the earning you deserved. Landed property is definitely tougher for you to sell compared to the high-rise property due to the amenities that high-rise properties provide. Many would prefer rental income thancapital gains because you will get passive income. If an individual wants to earn bigger lump sum profit, the investor should go for capital gain and sell the property.

Potential growth

This however depends on the individual perceptions and needs as some investors invest in a property to receive the capital gains, so they would wait until the right time when the market is going high before they decide to sell off their property to earn the capital gain from the property sale.

For investors who expects monthly rental income from the property they purchase, they might choose to continue it as they are passively receiving income without doing anything. Some investors just wanted to ensure the rental income is able to cover the installment required, thus enjoying the benefit of the tenant paying off the landlord’s housing loan commitment.

Holding period

Holding period is the real or expected time frame during when an investment is benefiting the investor where in the long position holding period refers to time between an asset’s purchase and its sale. If it is held for the short term capital gains then it will be taxed as regular income while long term capital gains has their own term of taxes.

Conclusion

Recaps from these key considerations above, it is better to take full consideration and discussion with the person who are more expertise in this issue when you decide to start your own investment in a property. Everybody want a successful earning from their investment and by making the right decision, it helps you to keep up in this game.